Arbitration is a process where parties present their arguments in a hearing format to an arbitrator who makes the decision. By choosing arbitration the parties have given the decision-making authority to the arbitrator.
Arbitration can be either binding or nonbinding. In binding arbitration the decision cannot be appealed or over-turned unless the arbitrator showed bias, discrimination, or fraud. If the decision is nonbinding, the parties can reject the decision and not be bound by it.
What are the advantages of binding arbitration over going directly to court
1. The arbitrator usually has special expertise that a judge does not.
2. Arbitration usually takes less time than going through the court system.
3. The costs of arbitration are usually much less than going to court.
4. The proceedings are more private than court if the parties don't want publicity.
5. There is more flexibility in scheduling the arbitration than in scheduling a court case.
6. A binding arbitration decision is generally easier to enforce than a court order.
7. A binding decision can only be appealed under very limited circumstances such as arbitrator fraud or bias.
What are the disadvantages of binding arbitration over going directly to court?
1. An arbitration can also be costly especially if there is an arbitrator panel.
2. An arbitration may take as long as a court case if there are scheduling difficulties.
3. The parties may disagree with the decision, but unless the arbitrator exhibits bias or fraud, the parties are stuck with it.
4. The arbitrator does not have to go by precedent. The arbitrator makes the decision based on this set of facts only.